Intellectual Property & Scarcity

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A recent post by Nick Weininger on The Agitator blog (run by Cato’s Radley Balko) offers some good points in rebuttal to Eugene Volokh’s argument which attempts to defend IP rights by analogy with tangible property rights.A quick perusal of Volokh’s post shows that he focuses on assigning property rights so as to give the proper incentives to invest or use resources efficiently. I think Volokh’s whole approach to property rights is confused, however. It is basically a utilitarian approach, which is of course, problematic, as Austro-libertarians well know. As I’ve argued elsewhere (and here), property rights allocate who has the right to control a resource. Obviously the very purpose of this is to specify which person, of multiple possible users, gets to use the thing. If there is no possibility of conflict over the thing, property rights are simply pointless.

It is when two or more potential users might both want to use something that only one can use–because use by one excludes use by the other–that we have a potential conflict that can be avoided by use of property rights. It has nothing to do with incentives to invest or other utilitarian concerns. Property rights should be assigned only to address a possible conflict over the use of a (necessarily scarce) resource–I say “necessarily scarce” because if it is not scarce (some use the unwieldy economic concept “rivalrous”) then there cannot be conflict over its use, by definition.

What rule should be used to assign property rights, in the case of scarce resources, is a debatable issue. Libertarians believe it is the first-use homesteading principle–“finder’s keeper’s”–the should be used to assign property rights. But regardless of the rule adopted, a conflict-avoiding rule can only be applied to a situation where conflict is possible–i.e. where there is a scarce resource at issue. Only one person can use a patch of land, because his use excludes that of others. Two people cannot simultaneously use it. If they try to, there is conflict. Thus a property rule can specify which one gets to use it.

However, the “things”–“ideal objects” as Tom Palmer calls them–that are protected by intellectual property rights are things like arrangements of characters on a page, techniques for doing something, functional arrangements of matter. In short, patterns, or information, or knowledge. Clearly two people can use the same recipe, or arrangement of matter, at the same time, without excluding the other’s use. This elementary point escapes notice of mainstream theorists who do not have an Austrian view of economic theory nor a libertarian view of ethics and property rights. The very function of a property rule is to prevent conflict. Conflict is only possible over scarce resources. Property rights therefore apply only to scarce resources. Moreover, since property rights are always enforced against scarce resources–e.g., your body, in the case of punishment; or your computer or printer in the case of copyright–granting property rights in non-scarce things always comes at the expense of property rights in scarce things. In other words, any kind of right in a non-scarce thing results in a redistribution of wealth–from the owners of real things, to those to whom government grants an IP privilege.

11:45 am on September 15, 2003